This website reported last week that the controversial “partnership” between Denel and the Gupta empire – notorious for being cronies of President Jacob Zuma – should be probed by the Public Protector.
At the time labour movement Solidarity wrote to Public Protector adv. Thuli Madonsela asking that the transaction between the Guptas and Denel be investigated as it could hold negative consequences for the future of the company and its employees. No the official opposition, the Democratic Alliance (DA) has also asked the South Africa Treasury to reject the deal.
The DA say the deal between the Guptas and Denel “is likely in contravention of the Public Finance Management Act (PFMA). Failing which the DA will request Parliament to summon Treasury to explain how this deal was allowed to go ahead despite it being born of a fatal error in due process. In so doing, Treasury must satisfy Parliament that the deal, in addition to following due process, was competitive and void of undue political considerations”.
Meanwhile the Business Day newspaper reports that the Gupta owned company, VR Laser, has partnered with Denel with the primary task of selling Denel assets in the Eastern market. VR laser has no presence in the Eastern market and they supply components for armour plate and armoured vehicle hulls, but their main focus is on steel cutting and processing.
The DA says VR Laser is not a good strategic fit for Denel other than being Gupta-linked. The big question on everybody’s minds is why should the Guptas be the primary beneficiaries of this deal.
According to the Shadow Minister of Public Enterprises, Natasha Mazzone, this deal has allegedly not been approved by Minister Brown or the Minister of Finance, Pravin Gordhan as is required by the PFMA with the application still being reviewed and processed. Denel still require a section 54 of the PFMA, that to be signed needs off by the Department and the Treasury, with a cost-benefit analysis and due diligence to be provided.
“The politicisation of state entities by deployment of cadres has become a growing trend that afflicts our State-Owned Entities (SOE) which only further serves to compound the financial pressures experienced by these sectors for self-interest.
“This news comes on the back of the Optimum mine controversy, where the Guptas have been involved in snapping up of coal mines on the cheap through assistance from the government. The Gupta involvement was not mentioned at the announcement and the venture was concluded in the absence of Denel’s permanent Chief Executive, Chief Financial Officer and company secretary, all three of whom are on suspension. There is a strong suspicion that they were removed to clear the path for this deal,” says Mazzone.
It also appears as if the Denel board acted outside their authority by announcing this deal prior to approval.